Xbox hardware revenue down 29% after fall in Q4 sales

Microsoft has released its Q4 earnings report for FY17, and its gaming revenue has increased three per cent year-on-year to hit $1.6bn, driven largely by Xbox software sales and services.

This figure may well have been higher, however, were it not partly offset by a decline in Xbox hardware revenue. This fell by 29 per cent year-on-year, mostly due to lower prices and a decline in the volume of consoles sold, Microsoft said.

Software sales, meanwhile, were up 11 per cent year-on-year thanks to a higher volume of Xbox Live transactions. Indeed, Microsoft reported that there are now 53m active users on Xbox Live as of Q4 FY17 from 52m in Q3 FY17. That said, it's still down on Q2 FY17's 55m active users.

Gaming is just one part of Microsoft's personal computing section, however, which as a whole fell by two per cent year-on-year. This was due to declining revenue from Microsoft's phone division, which "contributed four percentage points of decline" according to Microsoft's earnings call slides.

"Our gaming business is now more than $9 billion, and growing profitably," Microsoft's CEO Satya Nadella said during the company's earnings call.

"The gaming world is evolving faster than ever before – from game play across multiple devices, to the explosive growth in streaming and eSports, to new subscription services and mixed reality scenarios. We are uniquely positioned to capture a larger share of this opportunity because of our ability to unite the global community of gamers through Xbox Live – now 53 million strong and growing – and to enable new experiences across PC, console and mobile. Our approach is to let gamers play the games they want, with the people they want, on the devices they want.

"At E3, we celebrated the passion of gamers by introducing the Xbox One X, broadening our portfolio of gaming devices with the world's most powerful console. We launched two new services that broaden our reach and enrich the gaming experience, both of which are off to a very strong start. Mixer, our new live streaming service, makes it easier than ever before for gamers to create and share across platforms and interact in entirely new ways. Xbox Game Pass is a digital subscription service that expands our existing gaming value proposition.

"In closing, I'm proud of the progress this year – both in our own continued transformation and in how we are empowering customers to digitally transform."